|Ricardo A Pellerano|
The Dominican Congress is discussing an extensive amendment to the country's Monetary and Financial Law No. 183-02, which was originally enacted on November 21 2002 and provides the essential regulatory framework for the financial sector.
Although the Dominican Republic has been enjoying a long period of stability of its banking system, after the crisis of 2008 the time has come to revise and modernise the provisions that affect the operations and supervision of the sector. This amendment will, therefore, seek to modernise such legal framework and to implement internationally accepted best practices in the area while assuring and maintaining the stability of the system.
For general reference, and since the final product of the discussions undertaken during this amendment process is not yet known, the general objectives of the Bill include the following.
(i) To harmonise the provisions of the Monetary and Financial Law with other governmental and legal changes recently undertaken, such as those relating to the Dominican Constitution and the General Law of Commercial Entities. The Bill also intends to unify the provisions relating to the financial sector by incorporating into one legal body several legal provisions in order to better assure a cohesive structural framework and make its enforcement a more effective endeavour.
(ii) To restructure the powers and functions of the monetary authorities for purposes of guaranteeing their autonomy and enabling them to take prompt corrective measures with respect to any particular banking entity which might be falling into an irreversible situation or to handle a widespread systemic crisis, while maintaining a secure payment system and ensuring the protection of all deposits.
(iii) To regulate operations that were seemingly outside the scope of application of the Monetary and Financial Law or to enhance the supervision of other operations that were within the scope but not closely supervised. Hence, the concept of financial intermediation is being revised and more regulatory oversight is being placed on the foreign currency exchange sector.
(iv) To expand penal and administrative sanctions applicable in cases of fraud or violations of the Law, in order to further avoid the proliferation of these practices in the local financial sector.
The Bill is being discussed with all market participants and is expected to be passed into law sometime during 2011.
Ricardo A Pellerano